Core Viewpoint - Kangyuan Pharmaceutical has successfully included its unique products, including Wenyang Jiedu Granules and Yunu Decoction Granules, as well as the first generic drug Sumatriptan Naproxen Sodium Tablets, in the National Medical Insurance Directory (2025 edition) [1] Group 1 - Wenyang Jiedu Granules, as a unique product, is recognized for its clinical efficacy in improving symptoms such as cough, fever, fatigue, and loss of appetite, along with good safety [1] - Yunu Decoction Granules, also a unique product, is classified as a Category 3.1 new traditional Chinese medicine, aimed at treating dental pain, periodontal disease, oral ulcers, diabetes, and early-stage diabetes [1] - Sumatriptan Naproxen Sodium Tablets are expected to provide a new treatment option for acute migraine [1] Group 2 - The inclusion of these new drug varieties in the National Medical Insurance Directory is anticipated to drive the company's market promotion and sales growth, enhance its R&D innovation and brand influence, and benefit a wide range of patients [1] - The company has established a rich product portfolio in the respiratory and infectious disease sector, including products like Heat Toxicity Ning Injection and Jinzhen Oral Liquid, which have shown significant clinical efficacy [2] - Despite a decline in sales due to weakened terminal demand in the first three quarters of 2025, the company is ramping up production to meet the recovering market demand in the fourth quarter [2] Group 3 - The company is advancing its pipeline of innovative biological drugs for treating obesity or overweight and type 2 diabetes, with the first subject enrollment for the innovative drug ZX2021 Injection completed in June 2025, showing weight loss effects [3] - The innovative drug ZX2010 Injection for type 2 diabetes and obesity has also commenced its second-phase clinical trials, with plans to enter the third phase in Q3 2026 [3] - The company is committed to progressing all its research pipelines according to clinical plans and aims for early market launch [3]

Core Viewpoint - The company is committed to research and innovation, with a rich pipeline of products focusing on traditional Chinese medicine and various therapeutic areas [1] Group 1: Research and Development Focus - The company is concentrating on respiratory and infectious diseases, cardiovascular diseases, gynecological diseases, and orthopedic diseases in traditional Chinese medicine [1] - In chemical and biological drugs, the company is actively developing treatments for cardiovascular diseases, metabolic diseases, digestive system diseases, autoimmune diseases, and neurological diseases [1] Group 2: Clinical Trials and Product Pipeline - The innovative biological drug ZX2021 injection for treating obesity or overweight and type 2 diabetes is expected to complete the first patient enrollment in Phase II by June 2025, with plans to enter Phase III clinical trials in Q3 2026 [1] - The innovative biological drug ZX2010 injection for treating type 2 diabetes and obesity is set to complete the first patient enrollment in Phase II by July 2025, also planning to enter Phase III clinical trials in Q3 2026 [1] - The innovative biological drug ZX1305E eye drops for treating neurotrophic keratitis is expected to complete the first patient enrollment in Phase II by June 2025, with plans for Phase III clinical trials in Q3 2026 [1] - The innovative biological drug ZX1305 injection for treating optic nerve injury is currently undergoing Phase IIb clinical trials [1] Group 3: Communication and Disclosure - The company will fulfill its information disclosure obligations regarding clinical trial progress and review results in accordance with relevant laws and regulations, ensuring effective communication with investors [1]

Core Viewpoint - Kangyuan Pharmaceutical (600557.SH) is advancing its innovative drug ZX2010 injection for the treatment of type 2 diabetes and obesity, with key clinical milestones set for 2025 and 2026 [1] Group 1 - The first subject enrollment for the Phase II clinical trial of ZX2010 is expected to be completed by July 2025 [1] - The company has initiated enrollment in three out of four planned dosage groups for the Phase II trial [1] - The company plans to enter Phase III clinical trials in the third quarter of 2026 [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The company's operating performance is under short-term pressure, with a focus on the growth potential of its innovative pipeline [5] - For the first half of 2025, the company achieved revenue of 1.642 billion yuan (down 27.29% year-on-year) and a net profit attributable to shareholders of 142 million yuan (down 40.12%) [5] - The gross margin for the first half of 2025 was 70.88% (down 3.66 percentage points), and the net margin was 9.06% (down 2.95 percentage points) [5] - The company has adjusted its profit forecasts for 2025-2026 and added a new forecast for 2027, expecting net profits of 380 million, 431 million, and 491 million yuan respectively [5] Financial Performance Summary - Revenue for 2025H1 was 1.642 billion yuan, with a year-on-year decline of 27.29% [5] - The net profit attributable to shareholders for 2025H1 was 142 million yuan, down 40.12% year-on-year [5] - The company's revenue breakdown shows that injection liquid revenue was 506 million yuan (down 39.73%), while tablet revenue increased by 12.26% to 190 million yuan [6] - The company has completed the acquisition of 100% equity in a biopharmaceutical company, enhancing its innovative drug pipeline [7] Financial Projections - The company expects revenues of 3.529 billion yuan in 2025, 3.750 billion yuan in 2026, and 4.035 billion yuan in 2027, with corresponding net profits of 380 million, 431 million, and 491 million yuan [8] - The projected EPS for 2025, 2026, and 2027 is 0.67, 0.76, and 0.87 yuan per share respectively [8] - The current stock price corresponds to a P/E ratio of 26.8 for 2025, 23.6 for 2026, and 20.8 for 2027 [5][8]

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company is advancing its innovative drug pipeline, with a focus on three target areas, and has updated its key product pipeline [1] - The acquisition of 100% equity in Zhongxin Pharmaceutical for 270 million yuan will enhance the company's portfolio with four innovative products, including a three-target weight loss drug [1] - The company is expected to face performance pressure in 2024 due to external pharmaceutical environment and internal reforms, but is projected to enter a recovery phase in 2025, with steady growth anticipated from 2026 to 2027 [2] Financial Summary - Revenue is projected to decline from 4.86 billion yuan in 2023 to 3.90 billion yuan in 2024, with a growth rate of -19.9% [4] - Net profit attributable to the parent company is expected to decrease from 464 million yuan in 2023 to 392 million yuan in 2024, reflecting a -15.6% year-on-year change [4] - The company’s R&D expenses are projected to be 638 million yuan in 2024, indicating a strong commitment to innovation despite short-term profit pressures [2][4] - Forecasted net profits for 2025, 2026, and 2027 are 400 million yuan, 462 million yuan, and 530 million yuan, respectively, with corresponding growth rates of 2%, 15.7%, and 14.6% [2] Product Pipeline - The company is developing multiple products across various therapeutic areas, including: - SIPI-2011 for treating ventricular arrhythmias, currently in Phase II clinical trials [2] - AAPB injection for acute ischemic stroke, in Phase I clinical trials [2] - KYS202002A, a CD38 monoclonal antibody for multiple myeloma and lupus, with dual submissions in China and the US [2] - KYS2301 gel, a first-in-class peptide inhibitor targeting CCR8 for atopic dermatitis [2]